The International Monetary Fund (IMF) and the Asian Development Bank (ADB) are working to overcome the increasing difficulties faced by banks and traders in cross-border transactions with Pacific island countries.
Australia and New Zealand are financing the work, which responds to the problem of banks backing out of emerging markets following the tightening of global standards on anti-money laundering and combatting the financing of terrorism (AML/CFT) regulations.
Correspondent difficulties
The IMF and ADB recognise that correspondent banking relationships are essential to facilitate trade, promote economic activity and support incomes in the Pacific.
But with ever-tighter AML/CFT regulations, access to cross-border financial services has become difficult for some Pacific island countries due to high costs and pressure on international banks to close bank accounts.
Practical solutions
Recent roundtables on this matter, which brought together IMF and ADB representatives, banks, regulators and senior officials from financial institutions in Australia, New Zealand and the Pacific, discussed the issues and sought practical solutions.
Participants discussed ways to effectively implement robust regulatory and supervisory frameworks and enhance the AML/CFT controls of banks in the Pacific.
Information sharing
This could be aided by more training and capacity building, and a focus on automation and technology including databases to improve customer due diligence.
Better information sharing by Pacific island regulatory and supervisory authorities, as identified by the ADB’s national risk assessments would also help.
International financial institutions and training bodies (including the Asia Pacific Group and national regulators) should work together to provide more coordinated and targeted assistance to affected regulatory and supervisory authorities as well as banks.
Categories: Trade Based Financial crimes News
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